I bought a used iPhone 4, originally from the UK (now in Denmark). The phone has been reset/restored, updated to 5.0.1 and appears to be functional with 4-5 bars and the "3G" icon next to them. The phone worked perfectly with the previous owner's SIM card.
However, all outgoing calls fail immediately with a "call ended" message, incoming calls produce a two-tone at the caller's end and texts can not be sent, yet data works over 3G. Strangely, I have made 1 outgoing call while connected to iTunes, but a second attempt failed. I am experiencing this using a known-to-work SIM card from another iPhone.
In Xcode, the console produces these messages when trying to make a call:
kernel: computeProxBaseline.. This is a negative slope unit kernel: computeProxBaseline.. This is a negative slope unit kernel: This is a negative Slope unit. Going to use a fixed power of 3. This will behave like an Apex unit
Googling for this only revealed this unhelpful pastie: http://pastebin.com/q8vMQvpv
So, the phone or text is not working but data over 3G is.